Pastor, Church & Law

written by Richard R. Hammar, J.D., LL.M., CPA

Breach of the Fiduciary Duty of Care

Volume 2 . Chapter 6 . § 6-07.3

Key point 6-07.03. Church board members have a fiduciary duty to use reasonable care in the discharge of their duties, and they may be personally liable for damages resulting from their failure to do so.

1. In General

The board members of business corporations are under a duty to perform their duties "in good faith, in a manner they reasonably believe to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances." This duty commonly is referred to as the "prudent person rule" or the "duty of due care." In recent years, some courts have extended this duty to the board members of nonprofit corporations. To illustrate, a federal district court ruled that ...

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